2017 Was a Crucial Year for Cryptocurrency Regulation

The year experienced fluctuating cryptocurrency costs and endless initial coin offerings. So, it is not astonishing that in 2017, regulators all over the globe came forward to describe how they were going to manage what had up to now been a legally unclear environment.

China’s investigation of exchanges and the report from SEC on The DAO, 2017 may be ranked among the most crucial years as of now, where regulation is concerned. Actually, during that year regulators from a lot of top economies in the world issued investor warnings and advisory reports regarding cases of commercial use for the tech.

The previous couple of months have notably gone through increased action on the ICO funding model, as observed by prohibitions in important Asian states and enforcement activities in North America.

This article examines numerous significant policy changes from the last 12 months. A lot of them might have paved the way for more industry-defining advancement in the coming year.

During the initial week of 2017, ‘Big Three’ Bitcoin exchanges in China, Huobi, BTCC and OKCoin received warnings from the government’s central bank. In February, the caution about remaining compliant with ‘pertinent laws and regulations’ was preceded by a withdrawals freeze and the formation of new trading costs.

The People’s Bank of China in an endeavor to block the danger of money laundering implemented these two steps. After waiting for many months, in the end, exchanges restored access to money by users at the end of May.

Officials in the most populated country in the world eventually directed those cryptocurrency exchanges to stop selling and close down in mid-September, which together with the closure of BTTC led to the closing of the ‘Big Three’ ecosystem and propelled trading practices in China to markets of over the counter.

News of the impending closure emerged some days following the ban of ICOs by the state inside its borders, stating that the campaigns were run by ‘tokens that were unlawfully selling and distributing.’

The future of 2018 is unknown; however, commentators in China on government-owned television remarked in latest months that OTC cryptocurrency trading might be regarded as unlawful also.

For months, speculations had spread that the SEC would act to define the way it was going to regulate ICOs. But, the agency was secretive until the end of July when it announced that U.S. securities regulations could be imposed on some token sales. It would be determined by the token’s nature and how it was presented.

The funding model that would be used for the cryptographic tokens sale and distribution would be utilized to begin work on another blockchain network that was central at The DAO, which is a funding vehicle that is currently defunct. In 2016, it collected millions of dollars by selling DAO tokens.

Afterwards, in summer, it crumbled after a draining feat, leading to infighting for months, restoration efforts and finally, a division in the blockchain of ethereum.

In July the SEC published a statement showing that according to the U.S. law, DAO tokens were securities, although the agency said it had refused to follow any enforcement practice connected to the sale.

At that period, the SEC wrote:

‘The Commission considers it suitable and beneficial to the public to present this report to emphasize that the federal securities law in the U.S. might affect some activities, such as distributed ledger technology. It is determined by the specific situations and facts, without considering the kind of technology or organization utilized to carry out a certain offer or sale.’

The statements from the agency are essential as they triggered many similar cautions and articles from other regulators all over the globe.

The SEC itself was going to issue a warning regarding public-stock scams and celebrity endorsed ICOs that utilize the funding model as a method of attracting investors.

From July, the agency had tracked civil proceedings also, via a unit that was formed recently, dedicated to digital investigations. It is possible that readers of CoinDesk are aware of the controversy that has continued for a long time, concerning Russia’s cryptocurrency regulation.

Latest reports from senior lawmakers indicate that the State Duma in Russia might, in the end, accept regulations governing cryptocurrencies trade and provision. Reports from the beginning of the current year from president Vladimir Putin are debatably more effectual for the country’s tech future.

At the end of October, the Kremlin printed five directives from Putin whose focus was on numerous tech uses. He ordered other registration requirements for miners of cryptocurrency, the implementation of securities regulations to the ICO (Initial Coin offering) funding model and study on how the tech could be utilized as a section of a digital payments environment in the Eurasian Economic Union.

Emulating steps by other states in the previous year, Putin also directed that a regulatory ‘sandbox’ should be formed for countries that utilize technologies such as blockchain to create new services and products.

It is certain that the orders motivated the efforts on cryptocurrencies legislation. But, Putin’s proclamations have perhaps progressed endeavors to include the tech in the state government infrastructure of Russia.

They also emerged months following the meeting of the Russian leader with Vitalik Buterin, the ethereum creator.

Other Russian leaders have advocated the concept of utilizing blockchain for public sector also. For instance, Dmitry Medvedev, the Prime Minister directed state officials to start studying blockchain uses the previous spring.